6 Things to Look at When Choosing a Rewards Credit Card
Thursday, January 1st, 2009 If you’re going to use a credit card frequently, you may as well use one that offers rewards that are valuable to your 
lifestyle. Rewards programs have expanded considerably since their humble beginnings of giving cash back; now cardholders can receive credit card rewards in the form of free flights, meals, vacations, merchandise, gift cards and gasoline.
Not all rewards programs are rewarding for all cardholders, though. You’ll want to look at the following 6 areas of a rewards card in order to determine if it will be valuable for how you live your life:
1. What Kind of Rewards Do You Want?
If you never travel, it won’t do you much good to get a rewards card that gives you a free companion airfare or a free flight after you reach so many points on your rewards program. You can narrow down your selection of reward cards simply by finding the type of rewards you are most likely to redeem based on your lifestyle. Some people prefer cash back, so they can turn that cash into anything they want! Choose a category of rewards first, and then you can look only at cards with that type of rewards program.
2. How Are Rewards Earned?
All cards offer rewards based on how much you spend on your credit card, so in order to really get the most out of a rewards program you’ll need to use the card as frequently as possible, while paying it off in full each month to avoid interest charges. Look at how much you have to spend to earn towards your reward, and select a card that offers the most reward for the least amount of spending (after taking into consideration the other points in this article).
3. What Are the Spending Limitations?
With some rewards cards, you’re required to spend a minimum amount per month in order to maintain your rewards program. Be sure the minimum is a number you’re comfortable with and not one you accept just in hopes of earning a reward.
4. Are the Rewards Costing More Than The Worth?
One aspect people sometimes forget to consider when comparing rewards cards is the actual cost of the program. It’s easy to get caught up in all you can get “for free” and overlook the not-so-obvious expenses that you are charged for the rewards. Does the credit card have an annual fee? Is it low enough that the rewards you earn are worth more than the annual fee? If not, you’re paying for those rewards every time your annual fee is deducted from your account. What interest are you paying with your rewards card? As a general rule, rewards cards have higher interest rates than credit cards that do not offer rewards – but if you are someone who pays your credit card in full each month, it won’t matter as much as it will to someone who carries a balance from one month to the next.
What happens if you pay your card late? Do you lose the rewards or get jacked to a higher interest rate? Even if you don’t expect it to happen, you should know the consequences of paying late to see if it plays a role in your decision making process.
5. Ease of Redemption
Before choosing your rewards credit card, you’ll also want to take a look at how easy it is to redeem the rewards you’ve earned. Will the cash back be applied automatically to your account when you meet rewards goals? Will you receive a check in the mail? How do you get your free flights – and will you be limited by blackout dates for travel? What hoops do you have to jump through to get the rewards you’ve earned?
Also, take a look at whether or not the rewards expire if not redeemed in a certain amount of time. If you have to turn in rewards each six months but you don’t use credit cards often, you might find you don’t get anything at all with the rewards program. Alternatively, having rewards that don’t expire lets you earn over longer periods of time.
6. What Are Your Maximum Reward Limits?
If you use a credit card for all your monthly expenses and then pay it off each month, you want to earn the rewards based on your total spending and not the maximum limit a credit card will allow you to earn rewards on. If you’re a big spender, look for a card that can accommodate your habits to ensure you’re being rewarded at the maximum level.
